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TheStreet Open House

Lennar Reports Surprise 1st-quarter Profit

Stocks in this article: LEN.B

ALEX VEIGA

LOS ANGELES (AP) â¿¿ The spring home-selling season is off to a lackluster start, and a turnaround may not be in the cards until the second half of the year.

That's the main takeaway from Lennar Corp.'s latest quarterly results, which offered a glimpse into home sales trends in February, the official start of the traditional peak home-selling season.

Homebuilders hope to see improved sales this spring after a dismal 2010 that marked the fifth consecutive year that new home sales declined. But Lennar's results suggest the prospects for a strong seasonal lift in home sales may be slim.

The Miami-based builder said Tuesday that new home orders fell 12 percent in the December to February quarter and home deliveries dropped 3 percent.

The company surprised Wall Street by reporting a profit for the quarter, but the earnings came about as the builder cut homebuilding costs and other expenses. It also booked millions in revenue buying troubled loans and properties from banks.

Lennar's bottom line also got a boost from a $37.5 million lawsuit settlement and other special items.

Despite the profitable turn, the builder's homebuilding business continues to grapple with weak homebuyer demand.

"The long-awaited selling season of 2011 has not yet defined itself as the beginning of a recovery cycle," Lennar President and CEO Stuart Miller said.

It's still unclear whether home sales this spring will gain momentum or remain sluggish, Miller said. He noted that turnout by would-be homebuyers has been promising at times, raising hopes of a coming sales rally, but that traffic ultimately has not translated into robust sales.

"It has been more of the nature of a head fake and has lacked any substance that might define a clear upward trend," Miller said.

Homebuilders are a bellwether for the housing market and the economy. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates.

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